Financial statements are an important part of any company’s finances. It provides a comprehensive overview of the company’s earnings, costs and financial situation over the course of a financial year. For the self-employed and small businesses, working with financial statements can seem complex. Vouchers need to match, accounts need to be reconciled and legal requirements need to be met. At the same time, the accounts must give a true and fair view of the company’s finances. When bookkeeping, vouchers and reporting are structured correctly throughout the year, the process becomes much simpler. A good financial statement not only provides an overview of the past year, it can also be used as a tool to make better financial decisions in the future. With digital bookkeeping and clear workflows, many of the tasks can be automated, making the financial statement process more manageable.
What is a financial statement?
A financial statement is a company’s overall financial statement for a financial year. It shows, among other things, how the company has earned money, what costs have been incurred and what the company’s financial situation looks like at the end of the year.
A financial statement typically consists of:
- Income statement
- Balance
- Notes to the financial statements
For some companies, the annual report also contains a management report or other supplementary information. The purpose of the annual report is to document the company’s finances for owners, investors, banks and authorities. At the same time, it provides the company’s management with an important overview of the development of revenue, costs and liquidity. When analyzed correctly, financial statements can provide valuable insight into the company’s key figures and financial development.
Why are financial statements important?
Properly prepared financial statements are important for several reasons.
Overview of company finances
The financial statements show how the company has performed financially throughout the year.
Documentation for authorities
Companies must submit annual reports to the Danish Business Authority and businesses must report financial information to the Danish Tax Agency.
Better decision making
Analyzing company finances can help you plan investments, manage costs and improve profitability.
Trust with business partners
Banks, investors and business partners often use financial statements to assess a company’s financial stability.
A good financial statement is therefore not only about legal requirements, but also about providing insight into the company’s finances.
Deadline for financial statements
The deadline for submitting the annual report depends on the company’s size and accounting class. For most Danish companies in reporting classes B and C, the annual report must be submitted to the Danish Business Authority no later than 6 months after the end of the financial year. Companies in reporting class D, which are typically listed or state-owned companies, have a shorter deadline of 4 months.
Personally owned businesses are not normally required to submit an annual report to the Danish Business Authority, but they are still required to prepare accounts and report relevant information to the Danish Tax Agency. As regulations can change, it’s always a good idea to keep up to date with current requirements or get help from a bookkeeper or accountant.
How to prepare your financial statements
Working with the financial statements becomes much easier if the bookkeeping is structured correctly throughout the year.
A typical process can consist of:
- Reconciliation of bank accounts and balance sheet items
- Reviewing receipts and bookkeeping
- VAT and tax control
- Preparation of income statement and balance sheet
- Collection of documentation for the annual report
When bookkeeping is updated and reconciled on an ongoing basis, the end of the financial year often becomes a more manageable process. Digital accounting software can also automate many tasks, such as bank integration, voucher management and reporting.
How an accountant can help with financial statements
Many self-employed and small businesses choose to get help with their annual accounts from a professional accountant or advisor. Among other things, a bookkeeper can help with:
- Ensure correct bookkeeping throughout the year
- Reconcile accounts and receipts
- Prepare annual report or financial overview
- Meet deadlines and legal requirements
- Explain the company's key financial figures
At Accountview, we provide accounting and financial advice for self-employed and small businesses. We help with everything from daily bookkeeping and VAT to preparing annual accounts and financial sparring. We work with accounting programs such as Billy, Dinero and e-conomic and help establish digital workflows that make accounting more manageable. The goal is to give companies a clear financial overview so that the accounts are not just a report for the authorities, but also a tool for better decision-making.
Frequently asked questions about financial statements
What is a financial statement?
A financial statement is an overall statement of the company’s finances during a financial year. It typically consists of an income statement, balance sheet and notes.
When do you have to submit financial statements?
Most Danish companies must submit their annual report to the Danish Business Authority no later than 6 months after the end of the financial year.
Do all companies have to submit an annual report?
Answer. Personally owned companies are not normally required to submit an annual report to the Danish Business Authority, but they are still required to prepare financial statements for tax and financial management purposes.
Can an accountant help with financial statements?
What you need. An accountant can help with bookkeeping, reconciliation, reporting and preparing financial statements, as well as ensuring deadlines and regulations are met.
